Unemployment Benefit Provisions in the 2009 Economic Stimulus Plan

The 2009 economic stimulus recovery plan calls for a host of benefits for states, taxpayers, companies, and certain industries. In addition to personal tax breaks in the 2009 economic stimulus plan, you may be able to receive additional benefits if you received unemployment benefits of signed up for COBRA insurance coverage after a certain date.

Longer unemployment benefits. The bill calls for an additional 20 weeks of normal unemployment benefits, plus up to 13 additional weeks on top of the 20 extra weeks for unemployment filers who live in a “high unemployment state.” There are currently 30 states that qualify under the “high unemployment” label. Be sure to check with your state’s employment bureau for more information about your state.

Increased unemployment payments. The average weekly unemployment benefit in the US is around $300. The 2009 stimulus bill will temporarily increase payments by $25 across the board.

Tax exemption of some unemployment benefits. Unemployment benefits are considered taxable income. The new economic stimulus bill is calling for the first $2,400 of unemployment benefits paid in 2009 to be exempt from federal income taxes.

Health insurance help for the jobless. Another provision of the 2009 economic stimulus bill assists eligible jobless workers to pay for health insurance under COBRA. COBRA Health Insurance coverage gives newly unemployed workers the opportunity to continue receiving the same health insurance that was provided by their former employers – however, the newly unemployed workers must pay the entire cost out of pocket and they are only eligible to receive these benefits for a set period of time.

COBRA Insurance subsidies

As part of this stimulus bill, the government will subsidize 65% of the COBRA premiums for workers who were laid off between Sept. 1, 2008, and Dec. 31, 2009.

Who is eligible for the COBRA subsidy? The subsidy is limited to tax payers whose income is less than $125,000 for individuals or $250,000 for couples, and is good for up to 9 months of coverage. The bill will also extend the window of opportunity to sign up for COBRA coverage by 60 days for workers who were laid off between Sept. 1, 2008, and the day the stimulus law goes into effect.

How do you receive the COBRA subsidy? Employers pay for the subsidy out of their operating expenses, then file for reimbursement from the government. You will need to contact your former HR department for more information. Be patient with them if they do not have all the information readily handy – this is new for them too!

Additional benefits. The bill also gives states additional funding to increase the level of Medicaid availability for workers who cannot afford health care or who cannot sign up for COBRA Coverage because their former employer did not offer a health care plan.

About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is currently a member of the IL Air National Guard. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Can anyone answer for me, does this mean an additional 33 weeks of unemployment after the federal extension last year or does this mean you can claim the federal extension of last year later into the current year?

I was laid off on Jan 19th, this year. After reading the Cobra information it seems Im eligible to take advantage of the 65%. How does it work? What I have found out so far is
that my former employer must provide me with this information since they are the ones who will be getting the tax break or applying for the benefit. Is this Correct?

Missy: The second stimulus will not be a check at all – it will be a $400 or $800 tax credit that you will receive in your paycheck in the form of lower withheld taxes. You should see roughly $15 per check on a bi-monthly pay schedule. Please see this article for a breakdown of personal tax provisions in the 2009 stimulus package: Personal Tax Breaks in the 2009 Economic Stimulus Plan.

Michelle: I believe it is up to an additional 33 weeks total, but I am not certain. Each state may have a different total due to the way the bill came about. I recommend speaking with your state unemployment bureau.

John: Based on what I read in the bill, you would not be included in the subsidy program. You may want to check with your state to see if there are any state benefits or aid you may qualify for.

Eric: I am not certain. This bill was just signed into law this week, and I don’t know if the details have been released or not. This article is only a broad overview. I recommend checking back with your former company and the company that administers your health care plan. They also may not know right away, so you may need to check back frequently.

I have been getting unemployment since January 1st of this year. It says the first $2400 of unemployment is going to not have fedral taxes. I have made my $2400 already. Does that mean the first $2400 after the bill is signed? because they have taken federal taxes out of my checksd since the begining of the year before the bill was signed.

Anthony: They didn’t specify, but my guess is that there will be a new line item on next year’s tax form that will give you credits for the federal taxes you already paid. There won’t be a way to give that money back now. If you need the additional money now, you may be able to request they not withhold taxes from your unemployment payments now – while keeping in mind that you will owe federal taxes on anything above $2,400.

the extra line on next years taxes for a credit makes sense. i just wanted some insight to see if anybody knew if it started at the yr, or if they were gonna start now that the bill was in tact. Thanks

Debbi: One can generally apply for unemployment benefits when they are no longer employed, as long as they don’t have any other form of job related income. However, I’m not 100% certain about the details of who can apply or not. I recommend he contact the state employment bureau where he lives for more details. Best of luck.

How much more unemploymet you get depends on if you are in a state with 6% unemployment or more. If you are, you get an extra 30 weeks AFTER you run out of the extension which was signed by President Bush last November. If you are not in one of the higher employment states, you will get another 20 weeks only. All I know is, Florida has over 6% unemployment, so I do get another 30 weeks, whenever it kicks in. I run out in April, hope Florida gets it together by then.

Ryan, if I may, you have been helping everyone. I was laid off in November, and eligible for unemployment in Jan. due to pkg given in lieu of notice, I am in Texas and my Cobra would start, March 1.. I have not signed up yet, because the forms I received are before the Bill was signed, will the cost be adjusted? and who does that? should I contact HR of prev company?

Mary: I’m sorry to hear about your layoff and hope you will be able to find something soon. Unfortunately, I don’t have a good answer for you. My recommendation would be to contact the HR department at your former company or the insurance company that will administer the plan. Another source of information may be the state employment bureau. They may not know the direct answer, but may be able to point you in the right direction.

I’m sorry I couldn’t be of more assistance and hope you are able to find the answer. Best of luck to you.

Wesley: Yes, they extended unemployment benefits. From what I understand, some people in certain states will be eligible for an additional 13 weeks on top of the 20 weeks of unemployment. However, I don’t have any more information about how to claim that additional time or whether or not it will apply in your case. I recommend contacting your state unemployment bureau for more information. They will be able to give you information specific to your case.

Ryan: You have been most helpful, and I thank you for that. Please allow me to ask one more question: Unemployment in our state is 26 weeks, and there is a 20 week extension, and on top of that George Bush signed a 13 week extension in November. Did the stimulus package have any additional benefits for unemployment?

Dan: Unfortunately, I don’t have that answer. I recommend calling your former HR department or the company that currently handles your COBRA benefits. Hopefully they will have an answer, but it may not have been determined yet.

I would love to know that, as I’m sure that increase will start when the next extension starts. But no one (in Tallahassee anyhow) can say. I do know that your next extension won’t show in your account online until AFTER your balance goes down to zero. I recall that 20 week extension, it was in two parts. Part one was for 7 weeks. That had to get down to zero before the money for the next 13 weeks showed up. I did call Tallahassee after the stimulus was passed, but they knew nothing at that time. Right now, I have money coming till mid April. I won’t call Tallahassee again till then. But if anyone else finds out something, please post it.
Like, if you already ran out of ALL extensions, and suddenly money shows up or you get a letter, then that will be some information for the rest of us.

The information you provided is correct however very misleading to the reader who doesn’t understand where the subsidies come from.

The federal government is sending letters to employers who offer COBRA coverage that states “COBRA eligible employers will pay the 65% of COBRA costs for employees terminated involuntarily back to September 2008. The employer can get a credit when they file their quarterly payroll taxes (Form 941). The employee can be covered for up to 90 days at a time.”

It would be nice to see it mentioned that the help the unemployed individual is getting isn’t the federal gov’t giving them a gift it is their former employer providing them with insurance at a cost of anywhere from $2500 to more than $5,000 per former employee.

In our current economical crisis we can only pray this line item in the bill doesn’t cause more employees to be laid off in order to cover this significant employer cost increase.

jo: I comment on your specific situation. If you fall in the dates outlined above, you may be able to get an extension. If you do not fall within that window, I don’t know. Your best bet is to contact your former HR department for more information.

Karen: Thanks for sharing that link!

J. Faldyn: Thanks for the additional information. I have made updates to the information in the article to bring it up to date (not all the information was available when the article was written).

I just looked at the unemployment website for Florida, and read some bad news. It says “There are no additional EUC benefits for claimants who exhaust all of their First-Tier and Second-Tier EUC claims. So I called there because my second tier runs out in April, and I expected another 30 weeks, unless a job opens up. She told me that is NOT the case, that once you use up the extension President Bush signed in November of 2008, you will get NOTHING from the new extension signed by Obama. All you will get is the retroactive $25.00 from the week ending 2/28/09 till you run out. Does anyone know anything different? The lady from the unemployment office couldn’t answer till she read the same thing I just read, while we were on the phone. I am hoping there is another meaning, but I can’t imagine what it is.

If you go to your state’s unemployment site, there should (there is in Florida) be on the first page, a link re: Unemployment Compensation, american Recovery and reinvestment act of 2009 (P.L. 111-5) it states among other things: There are no additional EUC benefits for claimants who exhaust all of their First Tier and Second Tier EUC benefits. In other words, the LAST extension that President Bush signed in November of 2008 is the last extension passed. I was shook, and called my Congresswoman and she told me that the 30 week extension that we all thought was in Obama’s stimulus plan, is NOT in it. What you will get is the $25 a week more till you run out of that November extension, and it will be retroactive back to Feb. 22, 2008. Congresswoman Detert told me she heard there was a rumor out there about a 30 week extension, but our rich congresspersons took it out. So much for being for the people. Only big business, etc. gets help. If you have any doubts at all, want information, call your congressperson’s number. You won’t talk to him or her, but I did get a very knowledgable assistant. She had more information than the unemployment office in Tallahassee.

What a wonderful thing you are doing. It appears that you are very well versed on these matters. I was one of the casualties of the recent layoffs at Citigroup. I started collecting unemployment the last week of Dec. 08. When my 26 weeks run out, will I be eligible to receive additional benefits per the stimulus plan. I live in New York. Please help me decipher the following quote from the NY State Unemployment Office “Emergency Benefits
Due to the high unemployment rate in New York State, an additional 13 weeks of emergency benefits will be available on February 22, 2009, for a total of 33 weeks of emergency benefits. You may begin claiming these weekly benefits in the usual manner on Sunday, February 22, 2009. The last payable week of emergency benefits is the week ending May 30, 2010. For up to date information, check this website weekly.”

Frank: It appears as though you will be eligible to receive 13 additional weeks of unemployment benefits from the state of NY. I recommend contacting the state unemployment board and asking if there is anything you need to do to take advantage of this extension, or if it is automatic. Best of luck to you in finding new work.

Each state handles their own unemployment benefits and the benefits may vary from state to state. It is simply not possible for me to assist each person with their individual questions about unemployment benefits and extensions. Please contact your state agency for information specific to your situation. A complete list of state unemployment offices can be found at the US Department of Labor Workforce Security site.

Additional unemployment benefits and COBRA benefits information:

For more information about COBRA benefits extensions please visit the Department of Labor:

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